Big Tech capitalization exceeded $ 5 trillion
Despite pressure on leading tech companies and some legislators seeking to dismember them altogether, Big Tech’s multinational five is worth more than ever.
On Thursday, Alphabet surpassed $ 1 trillion in market value, becoming the fourth American tech company to reach that level after Apple (now about $ 1.4 trillion), Microsoft (now $ 1.2 trillion) and Amazon, which currently has a value of just over $ 930 billion ( the company crossed the $ 1 trillion mark last year).
Together with Facebook (over $ 632 billion), the five most valuable US tech companies are now worth a staggering $ 5.2 trillion, which is over 17% of S&P 500 according to FactSet.
These companies are attracting attention and increasing spending from businesses, consumers and advertisers. With all this dynamic, investors have largely ignored news of investigations by the Department of Justice, the Federal Trade Commission (FTC) and US state law enforcement agencies into potential Big Tech anticompetitive practices, as well as statements by presidential candidates Elizabeth Warren and Bernie Sanders that companies should be split.
Specifically on Alphabet, US attorneys general are investigating the company’s dominant search service and the company’s Android operating system, which comes with many Google apps pre-installed, for violations. Google continued to thrive despite the multibillion-dollar fines imposed by the European Union in the past, while privacy-related regulations such as the General Data Protection Regulation in Europe (Europe’s General Data Protection Regulation), generally worked in Google’s favor and hurt small businesses that have fewer ways and means to adapt sources and collect data..
«They have the resources and means to meet these needs, while not every competitor can.», – said Kevin Walkush, portfolio manager at the Jensen Quality Growth Fund, which oversees about $ 8.5 billion and considers Alphabet, Microsoft and Apple to be the best in their positions. For google «this is the main risk, but we think they have the resources to deal with any regulatory hurdles they have to deal with.», – said Walkash.
Google also had to overcome an abundance of internal turmoil. The company is being investigated over how executives dealt with allegations of sexual harassment and other misconduct, as well as employee protests related to mistrust of management and how some employees were fired.
But none of this stopped Alphabet from surpassing the $ 1 trillion mark in capitalization..
Almost all of Alphabet’s revenue still comes from advertising. But the company is also investing heavily in cloud infrastructure, which generates more than $ 8 billion in annual revenue, which puts the company in third place behind Amazon and Microsoft. Under the leadership of former Oracle CEO Thomas Kurian, Google Cloud is rapidly gaining traction through hiring and acquisitions, including the $ 2.6 billion acquisition of analytics firm Looker last year..
One of Google’s most recent $ 1 billion deals was not about online advertising or cloud computing. In November, the company announced a $ 2.1 billion purchase of smartwatch maker Fitbit, whose stock prices have plummeted in recent years amid competition from the Apple Watch. The Justice Department is reportedly set to renegotiate this deal..
Another consumer electronics company struggling for similar reasons is home speaker manufacturer Sonos, whose business has been hit hard by the massive proliferation of low-cost devices from Amazon and Google..
Sonos sued Google last week for patent infringement. The complaint alleges that Google copied Sonos’ wireless speaker technology while the two companies worked together back in 2013. Google disputes claims.
The broader story Sonos tells in his filing certainly resonates with thousands of small tech companies struggling to survive in a marketplace where Google, Amazon and Apple can afford to sell at a loss, killing competitors, and collecting massive amounts of data. for use in further expansion of their businesses.
From the Sonos statement:
The harm caused by violations by Google has been compounded by the company’s business strategy to use its rich audio products to collect invaluable consumer data from users and thus further strengthen the position of the Google platform among its users and, ultimately, to stimulate their dominant advertising and search services. In support of this strategy, Google not only copied Sonos’ proprietary technology, but also subsidized prices for its non-proprietary products, including in the early stages, and flooded the market. These actions caused significant damage to Sonos.
Even as Alphabet is expanding its enterprise software business and growing its gadget roster, the advertising division continues to make money frantically. Advertising revenue grew 17% in the third quarter to $ 33.9 billion, and Google is gearing up for an eventful 2020. RBC Capital Markets analyst Mark Mahaney told CNBC this week that the upcoming presidential election, along with the Tokyo Summer Olympics and the UEFA Euro 2020 football championship, will help drive significant results from Google and Facebook, both leaders in the online market. advertising.
Apple vs Amazon vs Microsoft vs Google , The race to 1 Trillion Dollars Market Cap